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Abstract

Despite the recent increase in the adoption and use of social media tools to support firm operations, very little empirical research focusing on small- and medium-sized enterprises (SMEs) has been conducted to-date. The aim of this study is to fill this knowledge gap by investigating SME adoption of social media tools. In particular, we assess the impact of organizational, manager and environmental characteristics on SME utilization of the Facebook Events Page. To test our proposed research model, we administered a survey to 453 SME managers. Results of a hierarchical logistic regression indicate that firm innovativeness, firm size, manager's age and industry sector all have a significant impact on social media adoption. Implications for research and practice are discussed.

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Introduction

Social media enabled value co-creation is emerging as an important area of interest for scholars and practitioners from various fields. Some scholars even suggest that social media will facilitate the widespread diffusion of “social commerce”, which is “a form of Internet-based social media that allows people to participate in the marketing, selling, comparing, and buying of products and services in online marketplaces and communities” (p. 215) (Stephen & Toubia, 2010). In 2011, the social commerce market represented about US$5 billion, with the potential increase to about US$30 billion by 2016 (Zhou, Zhang, & Zimmerman, 2011).

The rapid growth of social commerce is mainly due to the rapid diffusion of social media tools and channels such as Facebook and Twitter. Indeed, these tools can radically transform traditional firm processes by providing a better customer shopping experience (e.g., access to friends purchasing experiences, real-time sharing of purchase actions with friends before final purchase decisions) (Fisher, 2011; Zhou et al., 2011). Social media tools can also provide improved communication and collaboration between the firm and its stakeholders (e.g., customers, suppliers, business partners) (Burke, Fields, & Kafai, 2010; Culnan, McHugh, & Zubillaga, 2010), an innovative way for firms to identify products with high selling potential (Liang & Turban, 2011), and a better channel for attracting and retaining online customers (IBM, 2009). In the context of business-to-business (B2B) commerce, firms can use social media tools such as Facebook and LinkedIn to communicate with customers and suppliers, build relationships and trust, and identify prospective business partners in terms of B2B selling (Michaelidou, Siamagka, & Christodoulides, 2011). For example, Facebook, one of the main platforms for social commerce with around 800 million active users (Facebook, 2011), can allow firms to “harness social capital”, in a context where “retailers are eager to tap into the tremendous word-of-mouth potential of fans liking products, making purchases, and sharing with friends” (p. 1) (Olso, 2011).

Against this background, the emerging literature on social media-enabled organizational transformation has been demonstrated through the adoption and use of these tools by big organizations (e.g., Westpac Bank Corporation in Australia, Starbucks and Dell in the U.S.) (Gallaugher & Ransbotham, 2011; Husin & Hanisch, 2011; Sandsmark, 2011). However, few studies have explored the adoption and use of social media by SMEs (P. Cragg, Caldeira, & Ward, 2011; Shang, Li, Wu, & Hou, 2011), which represent a significant part of various Western economies. For example, SMEs account for about 99% of firms in the European Union, generating more than 70% of employment (Nieto & Santamaría, 2010). In the U.S., SMEs produce around 39% of the country’s gross national product (GNP) and generate about the two-thirds of all new jobs (Bruque & Moyano, 2007). In short, “SMEs are the engine of the economies of many countries” (p. 241) (Bruque & Moyano, 2007).